Raw transcript

Andrew: Hey. Before we get started, I want to congratulate Timothy Johnson and his team of Mixergy fans for designing TurkeyKnobApples.com. By the way, they sent me a box of Turkey Knob Apples. These things are not just delicious, but by the time I was done eating two or three of them, there was no room in my stomach for junk food so, I felt healthier and I really enjoyed them. So, if you are looking for a gift for yourself or someone else go to TurkeyKnobApples.com. You’ll enjoy the taste and how good you feel when you eat them. These are the kind of people who watch and learn from Mixergy interviews, doers like Timothy and his team.

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Hey, there freedom fighters my name is Andrew Warner, I am the founder of Mixergy, home of the ambitious upstart and home of about 800 interviews with proven entrepreneurs who come here to tell you how they built their businesses and basically share with you what they learned along their way so that you can go out there and build your own success story. Hopefully, you’ll do what today’s guest is doing. You’ll come back here and share your story when it’s ready.

In this interview I want to find out how a pizza shop led today’s guest to run a multimillion dollar business. Nick Sarillo’s father warned him about going into the restaurant business, but he did it anyway. Today, according to Inc Magazine, he’s a multimillionaire whose company is managed using a set of innovative checklists, methodical employee training, and a carefully built culture. I invited him to find out how he did all that and to ask him about that one email that he sent out that saved his company from going into foreclosure. It’s an incredible story. I can’t wait for you to hear it. Nick, welcome and thanks for telling us your story here.

Nick: Thank you, Andrew. It’s a great opportunity. I’m very grateful to be here and to share what we’ve done, the successes we’ve had, and the lessons we’ve learned.

Andrew: I’m looking forward to it. I usually interview tech entrepreneurs, mostly software. And in our space, nobody else seems to care about revenues. So, often, my first question to entrepreneurs is, “What is your revenue?” I want to be the one person who does at least ask that question. So, what’s your revenue?

Nick: Well, our gross sales this year are going to end up probably about 5.5 million marks or around there this year.

Andrew: 5.5 million selling drinks, pizza?

Nick: Yes. Primarily, 75% of our sales is food, mostly pizza. Most pizza- independents in our industry have a lot of liquor sales and clubs and things like that. We do have a full bar but we really focus on families and community, so that’s why most of our sales is food.

Andrew: Gotcha. The restaurant’s name is Nick’s Pizza and Pub. How many locations do you have?

Nick: We have two restaurants. I have one in Crystal Lake in the suburbs of Chicago, the other one is Elgin, just outside the city of Chicago.

Andrew: When you told your father that you were thinking of going into the restaurant business, what made you say that? Why did you decide that you wanted to go into that business?

Nick: For me, there were a couple things. One, I always believed in doing what you love to do. When you wake up in the morning you have got to be excited about your day. Soon as you’re not feeling that, if you don’t have that passion and that fire inside, first start checking yourself and see what else could you doing and that’s what I did. The thing that happened to me, I had three kids at the time. My daughter, Michelle, was six, my son, Nick, was four and my youngest son, Danny, was two. I wasn’t so happy about being a carpenter any more, it wasn’t feeling the same as it used to be. I didn’t have that passion for it, because the industry was changing. I went out to eat with my kids and my family and had a bad experience again with a server who treated my kids like they were second class citizens. I left there thinking to myself, “I know I could do this better”. I know that there are a lot of families out there that feel that their kids could be treated well, like real people. I could build a family environment and have a place that you could take your family and your kids to and kids could just be kids. It doesn’t have to be anything cheesy or phony or anything like that. Just authentic, real, casual, good connections.

Andrew: What was it about the previous job that you didn’t like? That left you feeling less than passionate? You actually just didn’t enjoy life, right?

Nick: Yeah, I was a carpenter for many years. I love building; I used to build custom homes. I love working with my hands, building things from the ground up. I had done that about ten or eleven years, I actually had a construction company with my brother. The industry changed. I think a lot of us are familiar with that shift from craftsmanship and really paying a lot of attention to a quality home to “hurry up and get it done fast”. I felt like I was starting to work in a factory when I was building custom homes. It was more about getting it done fast and quick and getting it done cheap. People really weren’t caring about whether the walls were straight or not, you know? So, it lost some of that for me.

Andrew: That makes sense. Now, I’ve gone into restaurants and said to myself, “There’s got to be a better way” and maybe I’ll even make the leap and say “I can do it better”, but then I just stop and go, “No, I can’t”. The reason you felt that you could do it better is that you have a history in your family of having run restaurants, right?

Nick: Yes, that for sure. I had a great recipe. My dad had a great pizza recipe and an Italian beef sandwich – a Chicago sandwich favorite – recipe.

Andrew: He ran a beef stand you told Jeremy, our producer?

Nick: Yeah, yeah…

Andrew: What’s a beef stand?

Nick: Yeah, if you’re not from Chicago, you might not know what an Italian beef sandwich is. It’s a big, juicy, thinly sliced beef that you have to bite into and it makes a mess. That’s an old family recipe he had in the Pilsen neighborhood in Chicago. I learned a lot, so it wasn’t just the great recipes, I also learned a lot about customer service. What I would call “guest service” in our industry. My dad taught me a lot about how to take care of the guest and how we really need to make sure they feel important, because they are.

Andrew: Do you have a memory of your dad taking care of a guest in a special way that made you say, “That’s the way that I need to be”?

Nick: Yeah. I think it was an everyday situation. I was probably ten years old when I started in my dad’s beef stand in Chicago. We worked with… my dad’s beef stand was a small place, but it was with my uncle Joe, my uncle Mike, my uncle Rocko, my cousin Joe, my cousin Mike, my cousin Rocko… you know, Italian families – not a lot of creativity with names. So, a lot of family. I learned how to work with family and take care of the employees. My dad was always very generous. I remember sometimes my dad would argue with my uncle Joe. They’d be bantering back and forth in kind of an Italian way, dropping a few f-bombs here and there, you know.

Andrew: Well, yes.

Nick: Yeah. Guests would walk in and he would turn around and from across the room he’d say, “Hi Sue! How ya doin! Come on in! Let’s get you your sandwich!” He would, just like that, make people feel like they were the most important thing in the world. I just watched that as a kid all the time, so that’s when I think I really understood the difference.

Andrew: You know what? My dad had that too. He was in clothing manufacturing and at one point he owned a store. He would be that good with customers and he would be that good with store owners. He would just go and shake their hand and act like he knew them forever and make them feel great. I couldn’t get anywhere near that kind of attitude, so I went in the opposite direction. I was, like, I can’t deal with that.

Nick: Yeah.

Andrew: You know and it became very serious. Did you find yourself going in that direction too? Saying these guys are strangers, why are we acting like they are family and rebelling?

Nick: Right. You know, when I got out of the construction business I was really aware. I worked in my dad’s restaurants until I was in high school. When I got in to the construction business, I noticed the different dynamic with your clients. You know, you were basically married to somebody for six months while you were building their home. Restaurant customer service was quite a bit different. It was more fast paced. Like you said, you’re probably not much of an extrovert and I’m not much of an extrovert myself. But I did learn how that was important. I think, for me, it wasn’t about being extroverted. It was about really sharing how really important they really were to my business. When people came in to my restaurant, especially opening my own place and how hard that is, I wanted to hug them because they came in. So, I didn’t have a problem with it. I was just really grateful.

Andrew: So, why did your dad say “You are nuts” when you went to him and said that you were thinking of opening up your own restaurant?

Nick: Well, the restaurant business takes a lot of hours and it’s a lot of hard work. I’m sure in a lot of businesses people would say there is definitely a tough part to all of it. But the restaurant industry is a different dynamic because there are so many businesses within one. The shipping and the receiving. The thing for him that I think he had the biggest challenge, where he got tired of and were he retired from the restaurant business was working with people. Working with your team. What I call my team but for him it was employees. He would say, “All these employees, they are such a headache.” I didn’t necessary agree with that part of the business, I didn’t think it was that big of a headache.

Andrew: One of the things I want to learn from you in this interview is why it’s not a headache for you. The reason, as I understand it from my research on you, is that you did create a process so people know what they need to do and we’ll talk about the checklist. You set out to have the system replace you so that you’re not like most entrepreneurs who own restaurants and stores, which is, that basically the whole business depends on them. You created a culture so that if you don’t write something down and you don’t have a system, the culture will catch it and make sure that the company keeps running. Do I have that understanding right?

Nick: Yeah, that’s a great way to articulate it. For sure.

Andrew: It stuck with me, because frankly, I’m an entrepreneur too and those are the things that I care about. How do I get most of myself replaced if not all and how do I make sure that if I don’t articulate a system and don’t have a checklist that things don’t fall apart. What’s the culture?

Nick: Yeah.

Andrew: But I’ll get in to that in this interview. First, let’s continue in chronological order. Your dad says “nuts” but he’s still family and he helps you find a location. Right?

Nick: Yes. Even in my book when I talk about the differences that my dad and I had, he still was always saying, “You’re nuts, and what do you need?” He was always supportive. God love him because even the parts that I share in the book, I share with him. I say, “Dad, I’m going to write about how we disagree. Is that OK?” He goes, “Yeah, whatever. You’re crazy anyhow.”

Andrew: [laughs] So, you found a piece of property. You didn’t have much money though. What kind of property did you get?

Nick: Yeah. Like in many small town middle America, there is that main street where everything is at. We have Route 14 here in Crystal Lake, where I opened my first restaurant, where all the restaurants run and of course, I couldn’t afford that. We had to go close to a mile off the road on another street that has actually become more of a main street now but it wasn’t at the time. The bottom line is, like many entrepreneurs, you got to be resourceful. You have to figure out something, you know, how do I work around this. So, that’s what we did. He was more in to real estate and he knew real estate business well and he found me a great deal. He helped me get started from that way and then along the way, as much as I had to do myself, my dad was always there to bounce ideas off of. Even when he disagreed, usually, I was doing more of that.

Andrew: [laughs] You guys worked so hard. Then early on, the cops came. What happened there?

Nick: Yeah, yeah. You know, it’s a good story, because I believe that a lot of start-ups and a lot of entrepreneursunderstand what it’s like. You don’t have the money. I didn’t have the money. I was still a carpenter during the day, working my regular — I was a union carpenter, too, so I wanted to keep my insurance, and my kids. So I worked as long as I can before I quit and opened my restaurant. So building the restaurant was actually something I did on the side, after I got off work at 3:30.

So there were many nights. But one of the nights, working, I had the walls up. I had just got the outside walls up, and good enough to hang some lights up on the top of the walls. And even though it was dark out, I kept working till 10:00 at night. And I had the cops come by, and they’d surround the place, and they’d pull up. You know, “What’s going on in there?” I’m like, “I’m just working.” [laughs] I had my tools on. It was a funny experience.

Andrew: It is one of the adventures, though, of getting to build your own company. Of having those times where you’re so proud of how long you’re working. You’re so proud of the fact that people — the cops don’t even expect you to be working this late. Right?

Nick: Yup. Yeah. Well, I would say I’m proud now. I don’t know, in the moment, I was so proud. [laughs] I was tired, and, you know. You’ve got to have a fire inside. You’ve got to believe in what you’re doing, and be able to put that extra time in. Even when I first opened the restaurant, how challenging that was, because I didn’t have corporate training and a whole of resources behind me. Like I often talk about, a lot of times I was working 20 hours a day. I would sleep in the parking lot of the restaurant and get up and get going again the next day. So.

Andrew: Wow. When you say you didn’t have corporate training, what did you feel you were missing when you first opened up?

Nick: Well, it was really challenging, because I built a big restaurant. It’s not as big as it is now, but at that time, it was about half the size, 150 seats, and still a bit old barn thing. And I had to open up the doors, train the people that were working with me to make pizzas and do all that stuff. We gave away lots of pizzas to the local fire department, Chamber of Commerce events. We’d do that just to help train my team.

And when I first opened, I had my dad, by grandpa was a host, my mom, my wife. You know, everybody involved. My brother and sister. Everybody was working in the restaurant along with the employees. So that was a big challenge. And believe me, as much as I love my family, it’s hard to work with your family.

Andrew: [laughs]

Nick: So I did everything I could to train my team as fast as possible, so I could have all these chiefs that were now in the kitchen, [laughs] you know, go ahead back to their home life.

Andrew: You know what, though? I studied business at NYU as an undergrad. Loved the business courses. I internalized them and studied them to death because I really loved business as a kid. They still didn’t train me to do what you did, which is learn how the process works, how to systemize it, how to then find the right people for it. That doesn’t come from school. But it also can’t come from figuring it out on your own, right? How did you know to do that? How did you learn?

Nick: Yeah. Well, there’s a couple. One, I think I did have a mindset of — really, it boils down to how I really believed in people. I believe that people do want to do their best. If I could train them well and then teach them how we make profit, they would do a good job. So I started, even in the early days, I started to figure out systems so that the expectation was clear around each job in the restaurant. So that works for any business. And then, when I got to the phase of, “OK, I really thought I had something special,” and then wanted to open more restaurants, that’s when I went out and hired a consultant, and said, “OK, now I need an expert to take me to that level.”

It’s easy to see down, but it’s hard to see up. I didn’t know what I didn’t know yet, and that’s why I went out and found Rudy Mick, who was my consultant, and really helped me tremendously.

Andrew: All right. I want to get into that too, because most people say consultants just take money and they don’t produce anything. You had an opposite experience. You found good results, and you actually kept working with him. But let me see if I understand how you got customers. You told Jeremy that right from the start, the place was full. I understand offering free food to firefighters and the community, and using that to train your people, and also to spread the word about the fact that you’re opening up, and to maybe bring people back in who’ve had a good experience the first time. But to me, that doesn’t fill up a location the first day, and the first week, and the first month. How do you do that? How do you get so many customers to walk in the door, and to sit down and buy food from a stranger?

Nick: [laughs] Yeah. Well, there are a couple things. One is differentiating yourself as a business model, especially in today’s day and age. Even though this was back in 1995, 17 years ago, I went out and looked for old barns, because I wanted to make my restaurant inside very unique. So I actually tore down — I found some farmers with barns that were kind of falling down, tore down the barns for them. They were happy to get rid of them. And then I was able to use that material in my restaurant to create a unique atmosphere. That was one.

So yeah, of course, our product, but the what is important. The product’s got to be good. More importantly, what I learned — and I didn’t know this, honestly, in the first days. You’re talking about the very beginning. I didn’t know — intuitively, I probably knew it, but I articulated it better — what Rudy helped me with was why we do what we do. Really sharing that piece. Because now, you’re going to create something that differentiates you from the place next door. So those, I think, are really important pieces to start with in a business.

Andrew: So you’re saying, I know to save money, and to also create the atmosphere you’re looking for, you went and you actually tore down barns for people. You said, “Hey, that things just sitting there rotting. Do you mind if I take the wood?”

Nick: Yeah.

Andrew: You brought that wood into your place.

Nick: Yes.

Andrew: You’re a carpenter, so you knew how to make it look right. And that drew people in? That they wanted to see this barn? I mean, that’s the location you were in. You were in a barn, where the insides were built from old barn wood, and that’s what drew people in. That uniqueness.

Nick: Yes. Yes. Yeah.

Andrew: How did they know that that existed, especially if you’re off the beaten path?

Nick: Yeah.

Andrew: I understand if you’re on Main Street and people walk past and go, “Wait, barn? And what did he do in there?”

Nick: Right.

Andrew: That, I get. But how, if you’re off the beaten path, do they come in?

Nick: There was a huge amount of anticipation. I had a big, huge — I had a couple 4 x 8 sheets of plywood with signs: “Coming Soon, Nick’s Pizza and Pub.” And I would put little sayings on there about how it was going to be different. And plus, imagine people driving by and this old barn getting built, you know? And seeing a sign, OK, it’s going to be a restaurant, but really what’s being built is this old barn. What’s going on here?

So what I believe I did well, what applies to other businesses, is I created a lot of curiosity.

Andrew: I see.

Nick: You know, in the very beginning. We created a lot of curiosity in our neighborhood. And, you know, there was no social media back then, but just from word of mouth. And then on top of that, the things I did. I said I was going to be a part of the community, and I did something to show that I was going to be a part of the community. So those, I think, are really the important elements in the very beginning.

Andrew: All right. I want to get into how you hired Mick. Mick is a consultant, right, who you brought in?

Nick: Yes.

Andrew: But first, you did a lot on your own.

Nick: Yes.

Andrew: Here’s what I was — when I got really stuck here, even at Mixergy, I got overwhelmed, I did some interviews on how to systemize, and what I heard over and over is, “Just write out what it is that you do. Just be clear about what those things are, and then systemize each of those major steps.” So even to book this interview, it was, find a guest, then request the guest to do a pre-interview, then pre-interview the guest, and so on, all the way down to, have the interview edited, have it posted, have it promoted, and so on.

So I wrote all those things down, and then I created a process for each one. Right? So the pre-interview works in a certain way, and we keep adjusting it, but there’s a template for it.

Nick: Yeah. (?)

Andrew: Is that what you did? Did you just sit and say, “What does Nick do on a daily basis, and what does this restaurant need to do?” and just write it out, and then carefully systemize each step?

Nick: Pretty much. I mean, I didn’t — yeah, that’s a great question. In the very beginning, I would say a year or so, I was blessed with a busy restaurant. So I probably had to speed up the process, as far as training people quickly . . .

Andrew: Mm-hmm.

Nick: . . . if I wanted to succeed. And so what I did, I actually created a system where people could get certified in the job — just like you just shared, right? I would actually have someone certified in answering phones, and how to answer phones. So through that process, I started –even rolling the dough. You know, most restaurants don’t certify someone just for rolling dough, but I broke it down. I said, “I want you to get certified in this piece first, then get certified in making pizzas; have 40 consecutive hours without a mistake; and you’re certified and things like that. That’s what I did.

Andrew: What’s the difference between, if I say, “Learn how to edit” and you say, “I want you to be certified as an editor”? I’m sensing already that it feels different. “I want to be certified”. “Learning, I have to for the job, but to be certified feels like a big accomplishment”. Beyond that, is there something else different?

Nick: Yeah. The other additional piece that I believe and so much I talk about when I talk about thinking of restaurant as a school and developing others is I put that certification on this big wall that we have in the back of our restaurant. It’s got everybody’s name on there on one side and on the other side it’s got all the certification levels that anyone in the company would go get certified. Now it’s public, so each person’s development is public knowledge not only for the rest of the team to see but also for yourself. If you have new team members come in the company they’ll say, “OK, here’s my pass. Here’s how I develop in my career path and here’s actually what I did too. Here’s the salary right next to it too.” Now, you can actually see how to get raises.

Andrew: I see. The more skills you get certified in, the more raises you get; the more responsibility; the more awareness other people have of your progress and pride that you have in the fact that you did it.

Nick: And of course the more valuable you are to the company as well.

Andrew: When I said that you have this special employee training–I’m looking at my notes from the intro–that’s what it is. That’s this process of teaching at a very specific organized way, not just hoping people figure it out as they watch you wing it, and certifying it. I also talked about the checklist. And this is something again: ink magazine has this great article on you. By the way, they introduce you as a millionaire. How did you feel having this word attached to you in the magazine?

Nick: Not very comfortable. [laughs]

Andrew: I was wondering about that.

Nick: It’s similar to having open books in the company. Opening out my salary to my team and all that stuff, there’s some fear and discomfort around it. And at the same time, the current tutor part becomes inspiring for either high school, college students, so as to say, “Why, I can own my own business and do this”. What’s really interesting is the roller coaster ride: having your own business isn’t always smooth sailing. Even in 2010, though I have all these businesses and, yes, I’m a millionaire from the value of my businesses and my income, at the same time, the economy tanked. Everything went down. We had our restaurant in Chicago that was going to open and fell apart just as the economy went down. This perfect storm of all we’ve seen has gone wrong at the same time took me from great heights to great lows. It’s not easy. We’re not perfect. What I love sharing with other entrepreneurs and business owners is, if you do the right things and if you really pay attention to the culture of your organization, what happens is you build all this trust in your team and your company and in your community. That’s what happens not only in my company but also in the communities where my restaurants are in.

So, as a result, when we did go through a really tough time last year about this time, the whole community, I was open about it like we always have, came out and supported us in an unbelievable way. That’s what’s really cool.

Andrew: You’re right. No other business owner, except maybe a stock trader or a gambler, could go from being on top of the world, being called a millionaire by your favorite magazine, being admired, running a business that’s successful, to suddenly being near bankruptcy. For you, it was the economy and opening up this new location. What else? What happened that created the setback? Then, I want to understand how the community helped you bounce back. Tell me more about this perfect storm. Nick: I want to share too that it doesn’t just happen on a whim, the things that we did. We built this up over years and that’s why I’m sharing it so people could do this for themselves. The first restaurant was great. The second restaurant was outstanding. Built this big place in Elgin, Illinois, and there was going to be 80,000 people moving in down the street and, all this stuff, and we’re on track. Sales were increasing like crazy. Inc. Magazine comes out and writes about us. So we started on a third restaurant in Chicago just as the economy took a dive.

The bank I was working with actually got bought out by Bank of America and then Bank of America pulled the plug on our deal and said, hey, we’re not going to do what we said we were going to do. Actually we were making it just fine even with all that going on with the downturn in the economy in our restaurants because of the culture. Then one more thing happened. Wal- Mart came in and said we’re going to open this super Wal-Mart across the street and we were happy about that. That was exciting, more traffic. Except that they tore up all of our road, the whole intersection from April to September, and they moved our entrance. Sales dropped like 40 percent that whole summer. That was just more than we could handle and put us in a really tough spot.

Andrew: All right. And then you did the thing that I hinted at the top of the interview. You sent out an email. What was in that email?

Nick: Yes. Well, I was pretty scared actually at the time because I had never missed on payments. I had always made payroll. I have always paid our vendors. All that stuff from the time I was 16 years old. So now I was getting into a place where I could see a few weeks out I might not make payroll. I was going to be late on our mortgage payments. And I was concerned that the bank was going to have to make decisions for us, and we were going to head down this road of crisis. So, I don’t understand how businesses… They are part of the community. They have people working for them for all these years and then all of a sudden they just lock the door. You go there and the door is locked. Someone who’s been working there for years or the community it’s been serving coming there and giving them the money for years, the door’s locked. So that’s where I couldn’t do that. I actually sent out a note, a letter, to all of our frequent diners who are in our database and I shared with them that it wasn’t about my team. My team had done all the right things.

It was about the poor real estate deals that I got us into that got us into this tough situation, and we were going to head down this road of possible foreclosure. It was an opportunity for them to either come by and say goodbye to us or come by and give us one last shot, and an amazing thing happened. We had a 100 percent increase in sales, 105 percent actually. Unbelievable. And what was even more important to me. Yes, the increase in sales helped us pay, get caught up with all of our bills and get us through the tough time because it was everything we needed. The more important thing is that our servers, our bartenders, our carry-out hosts got to hear all these stories from the families that came in about how important they were in their lives. The kids with their moms and dads. Those kind of stories had my servers in tears sometimes. It was really amazing.

Andrew: Unreal. You’re a proud man. I’m a proud man. We’re proud of the accomplishments that we have. We’re proud of people knowing that we’re successful. You must be proud that all these people who work for you are learning from you and are growing because of you. How, when you have all that perception out there, can you stand up and say via email? Write it down so you can never take it back or write it down in a letter and say I screwed up? How do you get yourself to do that?

Nick: It’s not easy. Especially when you have a few people telling you not to do it. Like the bank and the PR companies said don’t do it. Really, it’s …

Andrew: Because?

Nick: Well, because they were concerned that we were going to have all of our employees leaving. They told me your employees are going to … You’re going to have mutiny. They’re going to leave. You’re going to have your guests call you all kinds of names and not come in the restaurant. And you’re going to have vendors say, deliver COD, and say we’re not going to deliver unless we have cash. Well, quite the opposite happened with all those things. I had a vendor that donated a week’s supply, an independent guy like myself, donated his produce to us. The community came out. So to answer your question, honestly, when I wrote that I shed some tears. It was not easy. You have to let go of your ego. You have to surrender to a bigger picture of what’s your purpose. What is it you do, and is that purpose more important than your ego? And that’s what I did.

Andrew: So what is the purpose? You’re selling pizza, draft beer, some sodas. How do you add purpose to that? I ask because so many of us want to be not just in business, but be on a mission that happens to be the business that we get to enjoy working in every day.

Nick: Yes.

Andrew: And we think, “I’m just selling software.”

Nick: Yeah, but . . .

Andrew: “I’m just writing articles. I’m not . . . ” And so, you tell me, as a guy that anyone else could point to and say, “You’re just selling pizza!” How did you find your mission?

Nick: Well, I got to tell you, Andrew, that is one of the number one things, when we talk about having a positive culture that people love to be a part of, and want to work for, and actually perform at their very best, is to start with, “Why do we do what we do?” Define our purpose. And I know there’s — I’m not talking about mission. There are some great missions out there, and from my perspective, missions are more forward-looking. You know, “We have a mission to take the hill,” things like that.

Purpose is present tense, here and now, why we do what we do. So at Nick’s, for us, our purpose is to create the Nick’s experience. Our dedicated family provides this community an unforgettable place to connect with your family and friends. They have fun, and to feel at home.

So you notice there’s nothing in there about pizza, right? Because it’s not the why. And that creates a meaningful place to work in our organization. And especially with the younger generation. I’ve seen, I know for sure that people want to be a part of something more meaningful in their lives and work. And when you can divide to find that, it’s a differentiator.

And that’s what we need to do, because trying to compete on price and product, nowadays, is pretty difficult. I mean, everything can be outsourced. Look at the pizza industry, right? I can’t compete with the deals that [laughs] Domino’s and Papa John’s do. We have to differentiate ourselves. And that’s why we have such low turnover. We have 200 team members in our organization, and less than 20 percent turnover, in an industry that typically has 150% turnover. That’s a big part of it, is that purpose.

Andrew: And that saves money because . . . ?

Nick: [laughs] Well, you’re, for one . . .

Andrew: I mean, I know, I see it here in my notes. But I want to emphasize the significance of low turnover.

Nick: Yeah. In training, right? You spend anywhere from, if it’s a minimum wage job, each team member’s probably about $1500 in training, to salary individuals, where I’ve seen numbers around $25,000 every time you turn over somebody. So depending on the industry, it’s still a big number either way. And what about the guest experience, or the customer experience, when they get to see a familiar face, and you can build a relationship around that? Such an important thing, especially in today’s day and age, you know? Things are different, and we have to do something different.

And, on top of that, we really define our purpose really clearly. We also define our values. So our values are, again, present tense “we” statements. Again, there’s nothing in our values about pizza, and there is a lot about what the expectation is. What is A plus, what does excellence look like in our organization? We define that . . .

Andrew: Give me an example. What’s a value that you guys have?

Nick: Well, we treat everybody with dignity and respect. Right? An easy example: we provide a clean and safe environment for our guests and our team. Those are really, notice they’re “we” statement specific. So now, instead of a big policy handbook — we have no rules at Nick’s. We have our values as our guide in how we make decisions. So they actually become our actual standard, similar to what you hear about Nordstrom and companies like that.

Andrew: So do you have an example of how these values play out on a day-to- day basis? Do you have one example of how a server interacted with a customer because of this, in a different way than in any other place, or without it?

Nick: Yeah. That’s a great point, because it is my job, and every leader in an organization, to actually recognize the behaviors tied back to the values and the purpose if you want them to keep repeating. That’s the best way to get them from being a plaque on the wall that nobody pays attention to to actually alive and vibrant in the organization.

So, it can be something as simple — I just shared with you, we treat everybody with dignity and respect. So, Alan, yesterday, walked behind me and he says, “Excuse me.” I recognize just that dignity of our team saying “thank you” and “please,” and I share with them, great way to reinforce our value of dignity and respect, Allen. That’s the way to do it. So that’s a simple example too, if I have a new server, a new team member, I asked him at the end of the shift, shared with me one way you created the next experience on purpose with these guest. And, Britney, or Bri [SP] actually, and [??] just shared with me a story last week about, and when I asked that question because she was new or newer, and I still have to keep asking the question. If I don’t experience it first hand, I’ll ask. And she shared how she connected with the kids at the table and had them laughing and shared how these kids at this table were similar to her kids. She made it an unforgettable place which is part of our purpose, so that’s-

Andrew: You know what that makes me think of a story that I read. I can’t even find it here. My notes get longer and longer for every interview, but that’s helpful because one story that I think is really relevant here about how, I think you were sarcastic with someone. You asked for feedback and this person had the courage to say, hey, that comment you made, it just didn’t sit right with me. And instead of saying, lighten up, c’mon, or I’m the boss, I have all this stress, you should just accept this every once in a while. You said what?

Nick: Well, first of all, if we want to our team to give a, be safe and feel free to give us that feedback. The first thing you got to do is thank them and appreciate them for giving you feedback because it’s not easy. Imagine a 16, 17 year old giving the boss feedback, so the first thing I did was thank you Allen, thank you. I remember last week, I had something in the [??] restaurant as well where they, it happens all the time so we’ve learned not to make mistake. So I think the story that I shared earlier that you are referring to is, again, Allen on the ovens. I made a sarcastic comment to him about how he was pulling ovens and I really meant that I was appreciating how he was pulling ovens, and he wasn’t feeding the guy who was cutting pizzas well, and I made a sarcastic comment about whether it was the best way he could be doing it. And, at the end of the shift, he shared with me, said, what do you mean by that? Didn’t feel right, and I said, thank you, and you’re right. That was not effective for me to make a comment about feeding the cutter that way with your pizzas, and that’s the point is that to own that I actually said I won’t do that anymore or I’m going to pay better to being clearer and direct and my feedback just as I asked you to do it. It’s that simple.

Andrew: Well, I’ve got so many things here that I kept saying I’ll come back to, I’ll come back to and I wrote them down, so let’s make sure I get to all of them. So first thing is the check list. I use check list here internally. I, um, I just kept learning about it from my interviews. I was going to give the example of how I did it, but people can hear about it in the future time. I got you for only another few minutes left, so you tell me about how you do it with the flipping over of the card and what is that?

Nick: Yes, I’m happy to share this with other business owners because we do, the younger generation I found especially, I think everybody, even more so with the young folks that we have, they are not very happy with told what to do in so much with command and control and we talked about trust and check. So even the chalkless that we have, instead of a manager walking around with a clipboard and treating people like they are kindergartners and checking the salt and pepper and making sure it’s right. Instead we have what we call Operational Cards, Ops Card for short and they are very clear statements. I took a time card and this is some one of the things the system that Rudy Mick [SP] that brought to us from my associate, and one side is green, one side is red and on that card, it has very clear, I have wipe the salt shaker, I have wiped the pepper shaker. Very clear statements like that and at the end, it has on there in bold letters, this card is 100% complete, and when it’s 100% complete, that’s when you turn it from the red side, because the red side means it haven’t been done yet, to the green side. Now, I don’t have to babysit as a manager, I don’t have to walk around with a clipboard, checking people. I just can see from across the room that everything on all those cards are all green, and now, I can treat them like adults. It’s an amazing process and works very effectively and I love sharing it.

Andrew: And that’s one of the examples of what you learned.

Nick: Yes.

Andrew: From the consultant that you brought in for the second restaurant that has helped you, that helped you increase your culture, helped you reduce turnover and more than paid for itself, that relationship in those savings. I’m saying that because I want to make sure to get that in because I have a note to talk about that. But here’s the thing, you said that a lot of kids are resistant to being told what to do. I’ve got news for you. A lot of entrepreneurs are too. Even if they, themselves. I sit down and I have my own checklist before an interview or before a course, I might say, “Screw it. I’ve done this a million times, I don’t need it.” And I go and you know, and then I might realize. I forgot to. I don’t know, hit the lights. I forgot to make sure the mike is set properly. So, did you have that same issue?

Nick: Yeah. Well, like you said, I think I learned from myself as well. You know, I didn’t like to being told to do so and so I started my own business. So, you know, I just learned and this is is when [??], did this story in Ink Magazine. He said, “Nick, your leadership style is a little bit different than the old style of,” and he’s interviewed tons of people. He said, “I’m noticing a similarity between your leadership style and some of these other companies that I interview that were great companies, that had strong cultures and held their cultures as more important than being big companies.” And, we talked about it a lot and had a conversation and what he shared with me, is the history of commanding control mandarin and how that started in the 1900s. And how I wasn’t doing that and I agreed with him. And then through our conversation, the term that he came up with that just fits so perfectly was trust and track. He said that, “I notice in yourself and some of these other leaders that are more couches than they are cops.” We are coaching our team to realize their highest potential. That’s really what we’re doing. And that’s where the trust and track leadership came from, the term came from but it’s actually what I’ve been practicing for years.

Andrew: So, trust and track. And did he come up with it just for you or is this a term that I haven’t heard of before?

Nick: Yeah, he did come up with it out of our interview, actually. And it stuck with it. And now some of the other organizations that I’ve talked to, we’ve continued to define how effective that is and we teach it actually in our university.

Andrew: That magazine actually, Ink, is really well done. I use so many different resources for researching guests and invariably if there is a good article, I mean like a long article on a guest in Ink Magazine, it’s worth the read even if I’m pressed for time before the interview starts because those magazine articles are quality. Really well done.

Nick: Yeah. It’s a great way to learn.

Andrew: And it’s a university. I don’t want to skip over that part of what you said. You think of it as a university. You want to teach people and in complete with, I think, it’s like 101 on this topic. 201 on this topic, etc. Right?

Nick: Yeah. It’s part of our certification. You start out as a, you know, you go through orientation. We hire based on values. You go to 101. You go to 201 and then 301 is our trust and track leadership, trainer or training. And, yeah, it is. So we do have our, you know. I think what’s important too is for us as business owners, it’s not just teaching the tasks but also teaching life skills. So, we teach this leadership style. We also teach. Rudy Mick has a communication model that we teach as well. How to have safe space communication. And then I learn from the great game of business book that Jack Stack wrote on how to run your business with open books. So, we actually teach financial literacy for everybody in our company. From the 16 year olds to the 40 year olds. Very important stuff.

Andrew: And they get to see your finances too?

Nick: Yeah. Yes. We teach the PNL. We have fiscal huddles once a week with everybody in the company. So, it’s an activity and again it’s financial literacy that people could take home with them and apply to their own personal lives.

Andrew: Rudy Mick. I called him by his last name earlier. It’s just micck.com. That’s where we can find out about him and his organization. I’ve heard you bring him up a few times here. I’ve got to look him up too. The other thing that you brought up that I didn’t get more info on is the book, if people want to read your book. The name of it is The Slice of. There you go. You say it.

Nick: “A Slice of the Pie”.

Andrew: It’s right here on Amazon both Kindle and hard cover. Oh, and even on audible which I love.

Nick: Yes. Me, too. So, it is about creating a culture and I share all things and that I put together over these years, and how to get the high performance in the organization, you know, the culture. We don’t have to have so many of those big Starbuck’s and Zappos, and those big companies. You know, Whole Foods, Southwest Airlines. You don’t have to have a million dollar budget like they do in our everyday businesses. They have a really fun, effective culture like that. If you just do these things, starting with purpose, values, creating and sharing open books. Those things are just so important and it’s not rocket science. So we could all do that. Andrew: Let me do a quick plug and then ask you one final question. And the plug is of course for mixergypremium.com. I intentionally don’t talk it up in the beginning of the interviews, or even before we start because I want you to get a sense of what we are about, and then if you want to take the relationship to the next step, you’re prepared to understand what you are getting yourself into. There’s a certain mentality that we have here at Mixergy, which is now that we’ve got thousands of viewers, Nick, they all get this, but I like to repeat it. The idea is that we like to learn from other entrepreneurs, from other people who’ve done it.

What I do at Mixergy and I’m so lucky I get to do this, is, I invite entrepreneurs who do one thing especially well to come back and teach it. So if it’s a new entrepreneur, figured out how to get customers, not by selling online but by going from online to offline and closing the sales calls. I bring them on to teach this process. If it’s another entrepreneur who’s good at figuring out his customers problems and then how to build solutions for them, to improve his product, and raise his prices, and get more customers, I bring him on to teach it. It’s all real entrepreneurs, guys, who teach at mixergypremium.com, and if you have a membership I urge you to keep using that membership, and just go and download as many of them as he can. And listen to them in the background, and learn as much as you can, maybe even sit down as many people do, not just in the background but start taking notes. It’s all at mixergypremium.com. And Nick, you were going to say something?

Nick: Well, we’re doing exactly as I was saying, how times are changing, and how we have these opportunities to learn from others this way, it’s fantastic, and I love what you’re doing. I’m very grateful how you’re sharing the work, and how you’re helping other entrepreneurs who started like I did. You don’t have a lot of money in the bank, and you’re doing your best, you bust your butt to be successful in today’s world.

Andrew: Thank you and congratulations on all the success. Thank you, you sent in your information, you saw Mixergy and you said hey, I know you guys are looking for interviewee’s, my story would be a good one, and I’m glad that you did. And the final question is this. If people want to say thank you and they’re not in Chicago, what’s a good way for them to connect and say “Nick, I got a lot out of this interview, I really learned about systemizing, about culture, about one other thing”, and they want to connect with you what’s a good way for them to say thanks? Well you could tweet me, Facebook, all that stuff but my twitter is @nickerillo [??]. And if you go to nixerillo.com, you can get to our Nick’s University, Nick’s Pizza and Pub, you can get my book. All those things are through nixerillo.com. All right, congratulations, and we’ll learn more about how you built up this business on that site. Thank you all for being a part of it.

Nick: Take care.

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http://fewtureweb.com/ Raheem Sarcar

Andrew, was really surprised to see an interview with a restaurant entrepreneur but I really enjoyed it – there are excellent nuggets like the checklist, certification system and the great story about the email. Also really makes it clear how culture can be such a solid foundation.

http://www.facebook.com/dylan.watkins.9619 Dylan Watkins

Even though I own a Food Truck Biz. I didn’t find this interview as actionable as the other interviews. It seemed he had a lot of help from his Dad and was an instant success. (Not typical).

My question is how many of those practices he talked about being big help were started from the get go….like the open books, and the “Nick Experience”? It seems pretty easy to establish those things after you have your 1st “successful” restaurant and are talking to a consultant.

Although like Raheem said, some good nuggets. Checklist, cert system, and reaching out via the email

http://mixergy.com Andrew Warner

That’s a good question.

My suspicion is that big leaps like that happen when things are going so well that there’s time to implement them or when things are so bad that something major needs to be done.

But that’s just a hunch, which is nothing more than a starting point. I’ll have to ask about it in future interviews.

http://mixergy.com Andrew Warner

Thank you.

Mixergy is going to continue to focus on tech founders, but sometimes I go outside the focus to see what ideas I can bring back to our world.

His checklist process is definitely one of those useful ideas.

http://casjam.com/ Brian

I really like these “change of pace” interviews with brick and mortar, local businesses. Us web-folk don’t hear enough of these.

I too liked the certification idea. That’s something new I haven’t heard in the other interviews/courses about systemizing and I’m already brainstorming ideas on how to use it.

Would have liked to hear more about his marketing tactics on the local community level. You touched on his launch, with the building of the barn, etc, but would like to hear more about marketing beyond the first year for a local business like a Restaurant.

@AndrewWarner:disqus thanks for interview Nick. My mind was blown when he mentioned his Certification Program and also how he has a leaderboard for his employees which shows all their Certificates, Awards and Income. Please can you get him to come back to teach a Mixergy Premium class just on how he made this happen?

Thanks

Jiri Krewinkel

Really liked this one! Especially the part about using gamification with employees. You’ve been on a very good roll! Especially the Mastery interview

Drauch

Great interview Andrew. As a long time listener and aspiring entrepreneur, it was nice hearing Nick’s story. Especially because I have been a Nicks patron for years andy young kids love the place. I was just there for a Christmas party last week. He has created a real community treasure.

He created his success through a lot of long hours and hard work. He seems to always be at the restaurant. Everyone in the community knows Nick and loves his pizza. The community goodwill that cam out to support him was huge with people happily waiting hours just to support his business during his finically challenge. I personally received his email that described his financial dilemma. The best way to describe what followed would be to watch then end of “It’s a Wonderful Life”

Drauch

As a long time patron of Nicks, I can tell you that his success is the result of a real and long term commitment to the community and his employees. Nothing “instant” about it.

Nick Sarillo

Hello Brian, and those of you interested in learning more. I enjoy sharing what we do, and there are many systems here that I have devloped over the years for our business that I know work in more than just the restaurant business. I am happy to share about how we built a certification process for the team and executives, so the team can be accountable to their own development and their own raises.

I follow and enjoy the tech industry, and where we all have an opportunity is tapping into the potential of our people, that is where we could have a competive advantage. No matter what industry we are in, making the culture of our organization a focus and intentional is “how”. I am happy to share how we create a culture that has “meaning”, with a clear purpose, and how we use our values in everyday operations, not just a plaque on the wall. How we hire high performers, with two 15 minute interviews, how we teach our feedback model, our coaching model, how to stay out of drama, how to work through conflict with our “safe space” communication model, and much more, all covered in my book – A Slice of the Pie.

I would be honored to do more interviews with Mixergy, or what ever format works. I am here to share and make a postive difference in the world of business and peoples lives.

Nick Sarillo

Thank you Drauch and Andrew for your insights here.

Dylan – you have some good questions that I appreciate. I did have moral support from my dad at times, and at time not. I learned a lot from him about being an entrepreneur that I am grateful for, and actually I learned a lot from some really bad managers as well. I was fortunate to have a busy restaurant from the day I opened, and as I am sure you know, it will not be sustainable unless you make the best choices along the way. My point is that I want to share what I have learned from my success, and my failures so that you don’t have to go through the learning curve, or the expense I did. Please feel free to be in touch anytime at nicksarillo@gmail.com.

Happy New Year!

http://www.HireYourVirtualAssistant.com Owen McGab Enaohwo

@AndrewWarner:disqus please set up the master class with Nick on using checklist, his hiring process (<<<— certification and such)

http://mixergy.com Andrew Warner

I wasn’t sure how to get more details about his marketing tactics. That’s where my lack of experience in the restaurant business hurts my interview.

An interview isn’t about sitting back and letting the guest tell a story. It’s often about using my own experience to prod a guest’s memory and remind him of things that feel so obvious to him that he forgot he did them. Or knowing where to push to get a guest to reveal what he doesn’t want to give you.

I know some people will read this and say that I’m being too hard on myself, but that’s bull. I need to asses my assets and challenges so I know where to focus my effort.

http://mixergy.com Andrew Warner

Drauch, could you post that email here in the comments? I want to learn from it.

And thank you for bringing your firsthand experience to the feedback.

http://mixergy.com Andrew Warner

Thank you, Jiri.

I agree.

Jeremy gets a lot of credit here though. He’s the one who uncovered the parts of this story that would be relevant to you.

http://mixergy.com Andrew Warner

Good suggestion.

Are you thinking of creating a certification program?

http://mixergy.com Andrew Warner

Thanks for saying that.

http://mixergy.com Andrew Warner

Thank you for doing the interview, Nick. And for offering to return!

http://www.HireYourVirtualAssistant.com Owen McGab Enaohwo

I think it will be a great idea to get Nick back to share details regarding his recruitment process and how the certification classes help to foster team culture.

http://casjam.com/ Brian

Great point Andrew. I can see how many ins and outs there are to doing in-depth interviews like these. You’re the best in the business. Keep up the great work.

Drauch

Sure Andrew. Here is the email that was forwarded to me:

Nick’s Pizza & Pub
September 27, 2011Greetings!As a valued frequent guest of our restaurant, I feel it is necessary to share the following with you.

An Uncertain Future

I have never understood why owners or management of a failing company usually don’t give others close to the company–especially customers–fair warning about what is going on. In many instances, the team, the core family that built the business, has showed up to work and found the doors locked. I have always said I would never do that to the people I truly care about and owe my life to.

I realize that sending an e-mail like this is risky and unorthodox, but I don’t care because I don’t have anything to fear or hide. We run our business with totally open books, and the core team that shows up to our weekly fiscal huddles will not be surprised by what I’m writing. I truly care about our team and each guest who has blessed us by choosing to eat at Nick’s instead of any of the many other places available to them.

As of the beginning of this week, the hard reality facing us has become glaringly apparent to me. We overbuilt and overspent, and then we didn’t cut fast enough or hard enough when sales started to go downhill. The issue is primarily with our Elgin restaurant, but because we are one company, the failure ofElgin will likely impact Crystal Lake as well, depending on the choices our bank makes. This failure is not the fault of our team members; on the contrary, I am extremely grateful to them for their incredible contributions, including accepting salary cuts, taking on more responsibilities, and volunteering to market us on their own time. The whole responsibility for our troubles is mine for making the bad decisions that got us into this mess.

I realize that many of you out there see a busy restaurant and don’t understand how we cannot be profitable, or as many of you have expressed, how we could not be “rolling in cash.” We do bring in a lot of revenue, but unfortunately that is not enough to cover our mortgage and the other expenses that accrue from having such large facilities. In 2008, sales at our Elgin location began to drop, causing that location to lose money. Fortunately, Crystal Lake was profitable enough to cover both restaurants most of the time. As of this year, that’s no longer true. The sales drop in Elgin alone has been 30% since last year and close to 40% since 2007, thanks largely to the bad economy and our location next to the road construction.

We thought that the opening of a new Walmart across the street from Elgin on October 26th would bring enough new traffic to save that location and our company. Unfortunately, the bills that we have been pushing back this year are catching up with us now, about four weeks short of the finish line. Barring some sort of miracle, we are going to run out of cash to pay our vendors and team members over the next couple of weeks and will have to close. Believe me, I have already tried everything possible and would not be writing this if the amount we needed was not many thousands of dollars more than I personally could come up with. I really did believe we were going to make it to the finish line and pull through this, but I have nothing left that I can sell, pawn, or promise–just my business, which now is on the table.

I do have one last hope for me and the 200 team members of Nick’s. If within these next four weeks we could see a large increase in sales at either of our restaurants, we could still pull through. So my final request is for each of you to come dine at Nick’s Pizza & Pub and tell all your family, friends, co-workers, and neighbors to come now, too. We want to continue on as a part of your commuity and aren’t ready to tell you goodbye yet. If you wish to contact me with investor ideas or any ideas or questions at all, you can email me at office@nickspizzapub.com, call me at 815.356.5557, or simply stop by and talk in person.Thank you for reading.

Thanks for posting this. I’m so proud to have this with the interview.

http://www.facebook.com/people/Andrew-Woo/789485446 Andrew Woo

This really was a good change of pace. But still super relevant since a lot of folks out there try to get into the restaurant business (I know two of them myself)

http://kirstenwinkler.com KirstenWinkler

That’s also on my bucket list: opening a restaurant. But small and no menu – what comes on the table is based on what is available on the market that day.

I think talented restaurant owners like Nick are often not appreciated enough. They have so many skills to create a truly great experience they could probably run any kind of business / startup.

http://mixergy.com Andrew Warner

Right!

http://mixergy.com Andrew Warner

I bet a Mixergy for restaurants would do well.

http://kirstenwinkler.com KirstenWinkler

Thank you Nick, I would like to take you up on that!

http://www.it-sales-leads.com/ Barbara Mckinney

It is so important to have that kind of passion in everything you do(especially in business)And I really admire people like Nick,they don’t really care about the money;their main goal is to help other people in their own way.Thanks for sharing this interview Andrew!